Option Premium Calculator for Nifty and Stock Options
Enter the spot price, strike, days to expiry and implied volatility to get the fair premium of a call or put using the Black-Scholes model. It also splits the premium into intrinsic and time value, shows the rupee cost per lot, and works backwards from a market price to the implied volatility.
A model price is a fair-value estimate, not a quote. Real premiums move with demand, skew and the bid-ask spread.
What decides an option's premium
Six inputs go into the Black-Scholes price: the underlying price, the strike, time to expiry, implied volatility, the interest rate and the dividend yield. Five of them you can see. Implied volatility is the one the market sets, which is why traders quote options in IV as much as in rupees.
| If this goes up | Call premium | Put premium |
|---|---|---|
| Underlying price | Rises | Falls |
| Strike price | Falls | Rises |
| Days to expiry | Usually rises | Usually rises |
| Implied volatility | Rises | Rises |
| Interest rate | Rises a little | Falls a little |
| Dividend yield | Falls a little | Rises a little |
Intrinsic value and time value
Premium = intrinsic value + time value. A call's intrinsic value is spot minus strike, and a put's is strike minus spot, never below zero. Whatever is left is time value: what buyers pay for the chance of a bigger move before expiry. Time value melts as expiry gets close, fastest in the last few days, and on expiry day only intrinsic value is left.
How to use the premium per lot
Premiums are quoted in points. Multiply by the lot size to get rupees: a Nifty option at 150 points costs 150 × 65 = ₹9,750 for one lot, since Nifty contracts from January 2026 have a lot size of 65. For a stock option, enter that stock's lot size from your broker or the exchange's contract details.
Why the model price differs from the market
Skew. Out-of-the-money Nifty puts usually trade at higher IV than calls the same distance away. Using one IV for every strike will underprice those puts.
Events. Before results, the Budget or an RBI policy, IV rises because a big move is expected. After the event it often falls sharply.
Liquidity. Far strikes can have wide bid-ask spreads, so the last traded price may be stale.
American exercise. Black-Scholes assumes European options, which matches Nifty index options. Indian stock options are also European style.
The fix is simple: type the market price into the implied volatility box, read the IV, and compare it with other strikes and with India VIX.
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How is option premium calculated?
With an option pricing model such as Black-Scholes, using the underlying price, strike, time to expiry, implied volatility, interest rate and dividend yield. The market price is then set by buyers and sellers, and the IV that matches it is the implied volatility.
What is the formula for an option premium?
Premium = intrinsic value + time value. For a call, intrinsic value is the larger of spot minus strike and zero. Time value comes from the model and depends mostly on days to expiry and implied volatility.
How much does one lot of a Nifty option cost?
Premium in points × 65. At a premium of 120 points, one lot costs ₹7,800. The buyer pays this upfront and that is the most a buyer can lose.
Which IV should I enter?
The implied volatility of that strike, shown on most option chains. If you only know the market price, enter it in the implied volatility box and the calculator works the IV out for you.
Does this work for stock options?
Yes. Enter the stock price, strike, days, the stock option's IV and its lot size. Set the dividend yield to the stock's expected yield, or zero if it pays none before expiry.